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(Kitco News) - Gold prices may try to rise above $1,250 an ounce next week after rallying Friday following a dismal U.S. jobs report.

Market watchers said next week will be a big test for the metal as the $1,250 area has acted like a rubber roof in the past – gold would rise up to hit it, only to ricochet lower.

February gold futures rose Friday, settling at $1,246.90 an ounce on the Comex division of the New York Mercantile Exchange, up 0.67% on the week. March silver also rose Friday, settling at $20.223 an ounce, up 0.47% on the week.

In the Kitco News Gold Survey, out of 33 participants, 23 responded this week. Twelve see prices up, while five see prices down and six see prices trading sideways or are neutral. Market participants include bullion dealers, investment banks, futures traders and technical-chart analysts.

Gold prices rose Friday, supported by a weaker-than-expected nonfarm employment report from the U.S. Department of Labor, which showed only 74,000 jobs were created, versus about 200,000 expected.

The yellow metal had enough power to edge slightly above the old high for the week, peaking at $1,248.50 shortly before the Comex pit closed. Several analysts said gold could be poised to gain technical momentum next week.

Bob Haberkorn, senior commodities broker with RJO Futures, said gold rallied on ideas the Fed may not be as aggressive with its stimulus-tapering plans as originally expected.

“There are some ideas that maybe the Fed will be in the easing game for longer. Tapering is still happening, but maybe not as fast as we thought,” he said.

Haberkorn and several other market watchers said if gold can pierce through $1,250, it may encourage short covering, which is buying back of previously sold positions, by traders who rode the weaker trend in 2013. It’s been since about mid-November since gold values have consistently held above $1,250.

“The (bearish) trend might be reversing a bit…. The chart is showing higher highs and higher lows, which is a good sign,” he said.

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Part of the very recent strength in gold comes from index rebalancing, traders said. The major commodity indexes, including the Dow Jones-UBS Commodity Index and the Standard & Poor’s GSCI, both reset asset weightings for their respective indexes, which meant funds that follow these indexes also needed to rebalance their holdings. The rebalancing officially started on Wednesday, but many traders acted ahead of the official start to capture price moves.

Because gold prices fell so sharply in 2013, indexes added to their gold holdings to get their allocations back in line.

“Index rebalancing to continue through Tuesday or Wednesday will provide support to prices; trading volumes have been picking up, which could add to upward momentum,” said Erica Rannestad, senior analyst, precious metals demand at GFMS group of Thomson Reuters.

While some analysts see gold testing $1,250, Zach Oxman, portfolio manager at TrendMax, said he sees gold consolidating in a price band between $1,240 and $1,250 next week, saying the market is “comfortable” with that area.

After Friday’s lower-than-expected jobs numbers, he said it’s important to keep an eye on forthcoming data to see if other economic reports come out poorly, as one bad economic report doesn’t make a trend. Economic data slated for release next week include retail sales, inflation and some manufacturing data in the form of the Empire State Index and the Philly Fed.